Profits slide at DoCoMo

Japan’s biggest mobile company, NTT DoCoMo Inc. said its first-half profit dropped 20 per cent as increasing competition from KDDI and Softbank forced the giant to spend more to get subscribers to switch to its 3G service.

The company said its net income was 310bn yen ($2.6bn) in the six months ended Sept. 30, from 385bn yen a year earlier. In a statement to the Tokyo Stock Exchange today the firm said sales rose 0.4 percent to 2.383 trillion yen.

Its operating profit fell 7.4 per cent to 516.89 bln yen.

DoCoMo said it spent heavily to increase subscribers in light of new legislation in Japan – effective this week – which allows subscribers to change their carriers without changing their phone numbers.

The company said the number of subscribers to its FOMA 3G service was 29.1 million at the end of September which accounted for 55.8 per cent of the total. In the statement, the firm said it aims to have two-thirds of its subscribers using the FOMA service by the end of March.

Despite the difficult start, DoCoMo said it remains confident it can achieve its forecasts of profit for the fiscal year ending March, projecting net profit of 488bn yen and operating profit of 810bn yen.

DoCoMo has been engaged in a fierce battle for consumer hearts with its 3G service which has centered around its download offerings, particularly music. However, for every customer it lures onto its high-speed network, it is forced to pay significant subsidy costs for the expensive handsets the FOMA service requires.